The NFL Players Association is suing DraftKings over accusations the sportsbook breached a contract related to the foundering NFT market.
The NFLPA is owed about $65 million, based on commentary in the suit filed Monday. This is a different case number than the suit filed last week by the NFLPA against the sportsbook that sealed its filings.
DraftKings and the NFLPA were partners in its NFT business, including Reignmakers. The product was shuttered earlier this month by the sportsbook, though, citing “recent legal developments.”
“The impetus for DraftKings’ decision to repudiate its license agreement with Plaintiffs is simple: the once white-hot market for NFTs has cooled down,” the lawsuit says. “Buyers’ remorse, however, is not a basis to terminate a contract.”
Calculating total owed by DraftKings
The four documents filed by the NFLPA redacts nearly every financial figure involved, except for where the suit lists total compensation for five company executives since 2021:
- CEO Jason Robins: more than $82.1 million
- North American President Matt Kalish: ~ $62.5 million
- Global Technology and Product President Paul Liberman: ~ $62.5 million
- Chief Legal Officer R. Stanton Dodge: more than $27 million
- CFO Jason Park: more than $27 million
That totals $261.1 million, or “approximately quadruple of what DraftKings owes to the NFLPA Licensors,” the lawsuit states. That shakes out to nearly $65.3 million.
DraftKings is a “leading gambling company that generates billions of dollars in revenue based on a simple premise: if a DraftKings’ customer places a losing bet, that customer must still pay up,” the lawsuit says. “In its dealing with Plaintiffs, however, DraftKings has refused to play by its own rules.”
DraftKings justified stopped payments
DraftKings notified the NFLPA it would stop payment of minimum guarantees, which the operator claims is allowed in the contract.
The chief reason cited, the NFLPA states in its suit, is based on a clause that lets DraftKings terminate the deal “if a government, regulatory or adjudicatory body ‘determines’ that the ‘Licensed Products’ constitute ‘securities.’”
The sportsbook says the recent court ruling declining to dismiss a lawsuit challenging those NFTs as unregistered securities shows that NFTs are securities. The NFLPA disagrees.
“Needless to say, the court’s pleadings ruling did not ‘determine’ anything about the merits of the securities laws claims,” the lawsuit says. “DraftKings’ inability to profitably commercialize the intellectual property it licensed does not excuse performance, and DraftKings must pay what is due.”
Missed 2023 ‘true-up’ payment
The sports betting operator owed a “true-up” payment of a redacted amount in April 2023, but did not make it.
The company “repeatedly expressed concerns about the economics of the License Agreement and, even after the NFLPA Licensors expressed a willingness to help their business partner by renegotiating certain terms, refused to provide any assurances that it would make the payments owed,” according to the lawsuit.
The gaming company allegedly threatened to voluntarily close Reignmakers and the NFT Marketplace, saying it could terminate the agreement and not owe any more guarantees. The NFLPA said it would consider legal action to obtain the amount due.
Neither DraftKings nor the NFLPA responded to requests for comment.
